The Federal Reserve's actions in this meeting were significant, as they directly announced a 25 basis point rate cut, bringing the federal funds target rate to the range of 3.5%-3.75%. Powell's remarks at the press conference are also worth noting — he said that the rate is now at the upper end of the neutral range, implying there may be less room for cuts.

Here are some key data points to remember: Starting December 12, the Fed will buy $40 billion worth of Treasury securities over the next 30 days. Dot plot forecasts indicate that there could be one 25 basis point rate cut in 2026 and another in 2027, with median projections of 3.4% in 2026 and 3.1% in 2027. However, there are clear disagreements within the committee — seven officials believe no cuts are appropriate in 2026, while four think there should be two.

This voting also had some drama. Fed Governor Mester cast a dissenting vote, believing a 50 basis point cut is warranted; the Presidents of the Kansas City and Chicago Fed also voted against the majority, advocating for holding rates steady — three different opinions among five voters.

Powell's outlook on the labor market is cautious. He believes recent employment data has been overstated by about 60,000 jobs and expects monthly job gains to decrease by 20,000 moving forward. Regarding AI's impact on employment, he said it's "possibly one of the reasons, but not the main reason," noting that AI is more about increasing efficiency rather than directly replacing jobs.

On inflation, Powell stated that levels remain relatively high but expect goods inflation to peak in the first quarter of next year if no new tariffs are introduced. The Fed reaffirmed its 2% inflation target, and this stance remains unchanged. As for January's policy? Powell said a decision hasn't been made yet but emphasized that the current focus of debate is "holding steady or continuing to cut," not raising rates — "rate hikes are not anyone's baseline expectation."

Finally, a note: the large-scale Treasury bond purchase program is expected to be completed before tax day next year, April 15. The impact of this operation on market liquidity will need ongoing observation.